Weak Statutory Earnings May Not Tell The Whole Story For Genovis AB (publ.) (STO:GENO)

Genovis AB (publ.)'s (STO:GENO) stock showed strength, with investors undeterred by its weak earnings report. Sometimes, shareholders are willing to ignore soft numbers with the hope that they will improve, but our analysis suggests this is unlikely for Genovis AB (publ.).

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The Impact Of Unusual Items On Profit

For anyone who wants to understand Genovis AB (publ.)'s profit beyond the statutory numbers, it's important to note that during the last twelve months statutory profit gained from kr15m worth of unusual items. While it's always nice to have higher profit, a large contribution from unusual items sometimes dampens our enthusiasm. When we crunched the numbers on thousands of publicly listed companies, we found that a boost from unusual items in a given year is often not repeated the next year. Which is hardly surprising, given the name. Genovis AB (publ.) had a rather significant contribution from unusual items relative to its profit to December 2024. As a result, we can surmise that the unusual items are making its statutory profit significantly stronger than it would otherwise be.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On Genovis AB (publ.)'s Profit Performance

As we discussed above, we think the significant positive unusual item makes Genovis AB (publ.)'s earnings a poor guide to its underlying profitability. As a result, we think it may well be the case that Genovis AB (publ.)'s underlying earnings power is lower than its statutory profit. But at least holders can take some solace from the 33% per annum growth in EPS for the last three. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. You'd be interested to know, that we found 2 warning signs for Genovis AB (publ.) and you'll want to know about them.

This note has only looked at a single factor that sheds light on the nature of Genovis AB (publ.)'s profit. But there is always more to discover if you are capable of focussing your mind on minutiae. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks with high insider ownership.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.